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Aside from being able to quote one of the most quotable individuals in history, why would I feel compelled to make such a comment? It feels just like 2010, that's why. Rather than get into all the similarities (which are staggering in number), today's focus is on one of the budget proposals on the table for 2013 that includes language that could very easily cause the inclusion of ILIT held assets in a decedent's taxable estate.

That's right. Includes, not excludes. Sound like a problem? You bet.

Of course, while this is theoretically possible, it is rather unlikely to come to pass. The thinking is that there was a lack of, well, thinking around the rather far-reaching results of a very broadly written section of the budget. In fact, two experts, Randy Zipse, VP of Advanced Markets at John Hancock and Ronald Aucutt, Partner with McGuireWoods LLP, discussed this very topic in a recent podcast from John Hancock Advanced Markets Radio. Why do they reach this conclusion? The revenue associated with this section of the budget is $910 million, far short of what the presenters would expect if the intent of this budget provision includes all grantor trusts. I'll leave further analysis to them, but one of their points — that this budget isn't necessarily tied to one candidate or party — makes this worth watching both now and in
2013.

The balance of the discussion reviews additional aspects of the budget proposal, as well as the political climate around estate taxes through the end of this year and into 2013. As expected, the safe bet is on no action being taken until after the inauguration. Further, the expected action based on the presenter's commentary is likely to be an extension of the current limits.

The rationale for this opinion is that while the two candidates had widely differing views on this issue (Romney was in favor of complete repeal; Obama was in favor of a return to lower limits and higher rates) neither was willing to expend the political capital necessary to push what they really wanted through Congress after they won the election. The current levels are thought to represent a compromise both sides could live with, at least for now.

Another aspect of their conversation led me to the McGuireWoods website — a resource that I think I will find myself coming back to in the future. Mr. Aucutt maintains a document called Estate Tax Changes Past, Present and Future on the site, and not only is it a great resource, it is also a very thorough study of the history of the estate tax. While I have seen timelines and the like, most of them focused on the various tax rates and the on-again, off-again nature of the tax over the years. Mr. Aucutt goes quite a bit deeper, and anyone who needs to strengthen their knowledge of current law would also be well served by gaining the perspective his history provides. Rather than simply letting this resource stagnate, the author updates it roughly twice a month, rendering it a useful tool not only for today's information, but also staying informed going forward.

While much of it is unknown at this point, what is clear is that the only thing we can really count is more change.

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About the Author

I began my career as a Life Agent with MassMutual in San Diego in 1997. In addition to developing my own book of clients, I served as the Compliance Officer for this agency from 1999 to 2001.
In April 2000, I transitioned from personal production to the wholesaling and life
brokerage world as ... More